ECONOMIC IDEAL –
TEHRAN (Tasnim) – Gold surged to a record above $4,000 an ounce as investors sought refuge amid rising global economic and political uncertainty.
The precious metal has climbed by about a third since April, when US President Donald Trump’s tariff moves rattled global trade, marking gold’s strongest rally since the 1970s.
Delays in releasing key US economic data due to a prolonged government shutdown have further driven investors toward safe haven assets.
Spot gold rose to $4,036 an ounce on Wednesday afternoon in Asia, while gold futures matched that level on October 7.
Christopher Wong, rates strategist at Singapore’s OCBC Bank, said the US government shutdown, caused by spending disputes, was “a tailwind for gold prices.”
Gold typically gains during US government shutdowns, rising nearly 4% during Trump’s previous month-long standoff. However, prices could retreat if the current impasse ends sooner than expected, Wong noted.
UOB Bank’s head of markets strategy Heng Koon How called the surge “unprecedented,” saying it had exceeded analysts’ expectations. He linked the rally to a weaker US dollar and increased buying from retail investors.
Central banks have also played a major role, purchasing over 1,000 tonnes of gold annually since 2022 — more than double the yearly average between 2010 and 2021. Poland, Turkey, India, Azerbaijan, and China were among last year’s biggest buyers.
Beyond physical gold, investors have poured a record $64 billion into gold-backed exchange-traded funds (ETFs) this year, according to the World Gold Council.
Gregor Gregersen, founder of Singapore-based dealer Silver Bullion, said his customer base has more than doubled in the past year as banks, wealthy families, and retail investors turn to gold as a safeguard.
“Most of our clients are long-term holders,” Gregersen said. “Gold will fall at some point, but given the economic environment, it’s on an upward trend for at least five years.”
Still, analysts warned of potential risks. Prices may dip if interest rates rise or political tensions ease, Wong said. Gold fell 6% in April after Trump backed off from firing Federal Reserve Chair Jerome Powell.
In 2022, gold dropped from $2,000 to $1,600 an ounce after the Fed hiked rates to curb inflation from the pandemic. A resurgence in inflation could again trigger rate increases and pressure gold, Heng added.
The latest rally also reflects expectations of lower US interest rates, making non-yielding assets like gold more attractive, Wong said.
Meanwhile, Trump has intensified criticism of the Fed, accusing Powell of acting too slowly on rate cuts and attempting to fire Fed Governor Lisa Cook.
Such moves “undermine confidence in the Fed’s ability to act as a credible, inflation-targeting central bank,” Wong said.
“In this environment, gold’s role as a hedge against uncertainty gains renewed importance,” he added.
